ReportWire

Tag: Meta

  • More than 1,200 families suing social media companies over kids’ mental health

    More than 1,200 families suing social media companies over kids’ mental health

    [ad_1]

    When whistleblower Frances Haugen pulled back the curtain on Facebook last fall, thousands of pages of internal documents showed troubling signs that the social media giant knew its platforms could be negatively impacting youth and were doing little to effectively change it. With around 21 million American adolescents on social media, parents took note.

    Today, there are more than 1,200 families pursuing lawsuits against social media companies including TikTok, Snapchat, YouTube, Roblox and Meta, the parent company to Instagram and Facebook.

    More than 150 lawsuits will be moving forward next year. Tonight, you’ll hear from some of the families suing social media. We want to warn you that some of the content in this story is alarming, but we thought it was important to include because parents say the posts impacted their kids’ mental health and, in some cases, helped lead to the death of their children.

    Kathleen Spence: They’re holding our children hostage and they’re seeking and preying on them.

    Sharyn Alfonsi: Preying on them?

    Kathleen Spence: Yes.

    The Spence family is suing social media giant Meta. Kathleen and Jeff Spence say Instagram led their daughter Alexis into depression and to an eating disorder at the age of 12.   

    Kathleen Spence: We realized that we were slowly losing her. We really had no comprehension to how severe social media had affected our daughter. She was being drawn into this hidden space and this dark world.

    socialmediascreengrabs01.jpg
    Kathleen and Jeff Spence

    It began after the spences, both middle school teachers from Long Island, New York, gave 11-year-old Alexis a cell phone to keep in touch with them after school.

    Kathleen Spence: We had very strict rules from the moment she had the phone. The phone was never allowed in the room at night.  We would keep the phone in the hall. 

    Jeff Spence: We checked the phone. We put restrictions on the phone.

    Alexis Spence: I would wait for my parents to fall asleep, and then I would just sit in the hallway or I would sneak my phone in my room. I wasn’t allowed to use a lot of apps and they had a lot of the parental controls on.  

    Sharyn Alfonsi: And so how quickly did you figure out a way around the restrictions? 

    Alexis Spence: Pretty quickly. 

    Hoping to connect and keep up with friends, Alexis joined Instagram. Instagram policy mandates users are 13 years old. Alexis was 11.     

    Sharyn Alfonsi: I thought you had to be 13?

    Alexis Spence: It asks you, “Are you 13 years or older?” I checked the box “yes” and then just kept going.

    Sharyn Alfonsi: And there was never any checks?

    Alexis Spence: No. No verification or anything like that.

    Sharyn Alfonsi: If I had picked up your phone would I have seen the Instagram app on there?

    Alexis Spence: No. There were apps that you could use to disguise it as another app. So, you could download like a calculator, ‘calculator’, but it’s really Instagram.

    Jeff Spence: There was always some work-around. 

    Sharyn Alfonsi: She was outwitting you.

    Jeff Spence: Right, she was outwitting us.

    Kathleen Spence: She was addicted to social media. We couldn’t stop it. It was much bigger than us.

    socialmediascreengrabs02.jpg
      Alexis Spence

    Now 20, Alexis says an innocent search on Instagram for fitness routines led her into a dark world.

    Alexis Spence: It started as, like, fitness stuff. And then I guess that would spark the algorithm to show me diets, it then started to shift into eating disorders.

    Sharyn Alfonsi: What were you seeing?

    Alexis Spence: People would post photos of themselves who are very sickly or just very thin, and using them to promote eating disorders.

    images0.jpg
    Some of the images that were sent to Alexis through Instagram’s algorithms

    These are some of the images that were sent to Alexis through Instagram’s algorithms – which process the user’s browsing history and personal data, then push content to them they never directly asked for.

    Sharyn Alfonsi: What did you learn from looking at these pro-anorexic websites?

    Alexis Spence: A lot. Learning about diet pills and how to lose weight when you’re 11 and going through puberty and, like, your body is supposed to be changing. It’s hard.

    Sharyn Alfonsi: When did that stop being something that you looked at and start being something that you were doing to yourself? 

    Alexis Spence: Within months. 

    Sharyn Alfonsi: Did it normalize it for you? Did you think, “Oh, well, other people are doing this”?

    Alexis Spence: Yeah. Definitely. Like, they needed help. I needed help. And instead of getting help, I was getting advice on how to continue.

    By the time she was 12, Alexis had developed an eating disorder. She had multiple Instagram accounts and says she would spend five hours a day scrolling through the app, even though it often made her feel depressed.

    She drew this picture of herself in her diary crying, surrounded by her phone and laptop, with thoughts reading, ‘stupid, fat…kill yourself.’

    Alexis Spence: I was struggling with my mental health. I was struggling with my depression and my body image. And social media did not help with my confidence. And, if anything, it made me, like, hate myself.

    socialmediascreengrabs09.jpg

    It all came to a head her sophomore year when Alexis posted on Instagram that she didn’t deserve to exist. A friend alerted a school counselor.

    Kathleen Spence: That was the scariest day of our lives. I got a call to come to the school.  And I went there and they were just showing me all of these Instagram posts of how Alexis wanted to kill herself and hurt herself. And if Instagram is really — has all the software to protect them, why was that not flagged? Why was that not identified?

    This previously unpublished internal document reveals Facebook knew Instagram was pushing girls to dangerous content.

    It says that in 2021, an Instagram employee ran an internal investigation on eating disorders by opening up a false account as a 13-year-old girl looking for diet tips. She was led to content and recommendations to follow ‘skinny binge’ and ‘apple core anorexic.’

    Other memos show Facebook employees raising concerns about company research that revealed Instagram made 1-in-3 teen girls feel worse about their bodies and that teens who used the app felt higher rates of anxiety and depression.  

    Sharyn Alfonsi: What was it like when you saw those Facebook papers for the first time?

    Kathleen Spence: Sickening. The fact that I was sitting there, struggling and hoping to save my daughter’s life. And they had all these documents behind closed doors that they could’ve protected her. And they chose to ignore that research. 

    Attorney Matt Bergman represents the Spence family. He started the Social Media Victims Law Center after reading the Facebook papers and is now working with more than 1,200 families who are pursuing lawsuits against social media companies like Meta.       

    Matt Bergman: Time and time again, when they have an opportunity to choose between safety of our kids and profits, they always choose profits.

    socialmediascreengrabs03.jpg
      Matt Bergman

    Next year, Bergman and his team will start the discovery process for the federal case against Meta and other social media companies, a multi-million dollar suit that he says is more about changing policy than financial compensation.

    Bergman spent 25 years as a product liability attorney specializing in absestos and mesothelioma cases. He argues the design of social media platforms is ultimately hurting kids. 

    Matt Bergman: They have intentionally designed a product that is addictive. They understand that if children stay online, they make more money. It doesn’t matter how harmful the material is.

    Sharyn Alfonsi: So the fact that these kids ended up seeing the things that they saw, that were so disturbing, wasn’t by accident; it was by design?

    Matt Bergman: Absolutely. This is not a coincidence.

    Sharyn Alfonsi: Isn’t it the parents’ job to monitor this stuff?

    Matt Bergman: Well, of course it is. I’m all for parental responsibility. But these products are explicitly designed to evade parental authority. 

    Sharyn Alfonsi: So what needs to be done?

    Matt Bergman: Number one is age and identity verification. You know, that technology exists. You know, if people are trying to hook up on Tinder there’s technology to make sure that the people are who they say they are. Number two would be turn off the algorithms. You know, there’s no reason why Alexis Spence, who was interested in exercise, should have been directed toward anorexic content. Number three would be warnings so that parents know what’s going on. Let’s be realistic, you’re never gonna have social media platforms be 100% safe. But, you know, these changes would make them safer.

    Right now, the Roberts family says social media is not safe for kids. Englyn Roberts was the baby in a large family, the center of her parents Toney and Brandy’s world.

    Toney Roberts: She made every day…

    Brandy Roberts: Special.

    Toney Roberts: Every day felt like Christmas here.

    socialmediascreengrabs06.jpg
      Toney and Brandy Roberts

    But Englyn’s life online told a different story. As the pandemic played out, Englyn wrote about struggles with self-worth, relationships and mental health.  

    One August night in 2020, just a few hours after Toney and Brandy kissed their 14-year-old smiling daughter goodnight, Brandy received a text from a parent of one of Englyn’s friends who was worried about Englyn and suggested they check on her.

    Toney Roberts: We went upstairs, and we checked, and her door was locked. That was kinda odd, so I took the key from the top and we opened the door and no Englyn. And when I turned around that’s when I found her. When you find your child hanging, and you are in that moment in disbelief. It’s just no way. Not our baby. Not our child. And then ultimately, I fault myself.

    Sharyn Alfonsi: Why do you fault yourself?

    Toney Roberts: Because I’m dad. I’m supposed to know.

    Sharyn Alfonsi: Prior to that night you had no idea that she was depressed?

    Toney Roberts: Not. Not even close.

    Like the Spence family, Toney Roberts started connecting the dots after the Facebook papers came out and began digging through his daughter’s phone for answers. He found an Instagram post sent to Englyn from a friend. 

    Toney Roberts: There was a video. And that video was a lady on Instagram pretending to hang herself, and that’s ultimately what our child did. Cause, you ask yourself, how did she come up with this idea? And then when I did the research, there it was. She saw it on Instagram. It was on her phone.

    Brandy Roberts: If that video wasn’t sent to her, because she copied it, she wouldn’t have had a way of knowing how to do that certain way of hanging yourself.

    socialmediascreengrabs13.jpg
    Toney and Englyn Roberts

    Nearly a year and a half after Englyn’s death, that hanging video was still circulating on Instagram, with at least 1,500 views. Toney Roberts says it was taken down in December 2021. The Roberts are suing Meta, the parent company to Instagram. 

    Toney Roberts: If they so call monitor and do things, how could it stay on that site? Because part of their policies says they don’t allow for self-harm photos, videos, things of that nature. So, who’s holding them accountable?

    Meta declined our request for an interview, but it’s global head of safety gave us this statement – telling us, “we want teens to be safe online” and that Instagram doesn’t “allow content promoting self-harm or eating disorders,” and that Meta has improved Instagram’s “age verification technology.”

    But when 60 Minutes ran this test two months ago, our colleague was able to lie about her age and sign up for Instagram as a 13-year-old with no verifications. We were also able to search for skinny and harmful content. And while a prompt came up asking if we wanted help, we instead clicked see posts and easily found content promoting anorexia and self harm — showing more rigorous change is needed, a challenge the Spence and Roberts families are ready for.

    Kathleen Spence: We’re being gaslighted by the big tech companies that it’s our fault. When really what we should be doing as parents is banding together and say, “No. You need to do better. I’m doing everything I can. You need to do better.”

    Brandy Roberts: We’ve lost, we’ve learned, but what’s gonna stop these companies from continuing to let things happen if they don’t change or be forced to make a change?

    Toney Roberts: Social media is the silent killer for our children’s generation. That’s the conclusion I’ve come to. Why is everyone in power that can help change this, why is it not changing quick–enough? If our children are truly our future, what’s the wait?

    RESPONSES FROM META, SNAPCHAT, AND TIKTOK

    Statement from Meta

    “We want teens to be safe online. We’ve developed more than 30 tools to support teens and families, including supervision tools that let parents limit the amount of time their teens spend on Instagram, and age verification technology that helps teens have age-appropriate experiences. We automatically set teens’ accounts to private when they join Instagram, and we send notifications encouraging them to take regular breaks. We don’t allow content that promotes suicide, self-harm or eating disorders, and of the content we remove or take action on, we identify over 99% of it before it’s reported to us. We’ll continue to work closely with experts, policymakers and parents on these important issues.” – Antigone Davis, Vice President, Global Head of Safety, Meta

    Statement from Snapchat Global Head of Platform Safety Jacqueline Beauchere

    “The loss of a family member is devastating, and our hearts go out to people facing these tragedies, no matter the circumstances. We designed Snapchat to be different from traditional social media, built around visual messaging between real friends and avoiding the most toxic features that encourage social comparison and can take a toll on mental health. We know that friendships are a critical source of support for young people, especially when dealing with mental health challenges, and we continue to work with leading experts on in-app tools and resources to support our community – especially those who may be struggling.”

    TikTok only provided background information and declined to provide statement in response to our story.

    Produced by Ashley Velie. Associate producers, Jennifer Dozor and Elizabeth Germino. Edited by April Wilson.

    [ad_2]

    Source link

  • EU set to bar Meta from ads based on personal data

    EU set to bar Meta from ads based on personal data

    [ad_1]

    Meta will only be able to run advertising based on personal data with users’ consent, according to a confidential EU privacy watchdog decision, a person familiar with the matter said on Tuesday, in a blow to the US social network.

    The Irish data protection agency, which oversees Meta because its European headquarters is located in Dublin, has been given a month to issue a ruling based on the European Data Protection Board’s (EDPB) binding decision.

    The EDPB will likely require the Irish body to hand out fines, the person said, asking not to be named because of the senstivity of the issue.

    Big Tech’s targeted ad model and how data is collected and used has drawn regulatory scrutiny around the world.

    Shares of the company were down 6.2% in mid-session trade. Google, Snap and Pinterest which are reliant on digital advertising, fell 2.2%, 8% and 4% respectively.

    The Irish case against Meta was triggered by a complaint by Austrian privacy activist Max Schrems in 2018.

    “Instead of having a yes/no option for personalised ads, they just moved the consent clause in the terms and conditions. This is not just unfair but clearly illegal. We are not aware of any other company that has tried to ignore the GDPR in such an arrogant way,” Schrems said in a statement.

    He said the EDPB’s ruling means that Meta must allow users to have a version of all apps that do not use personal data for ads while the company would still be allowed to use non-personal data to personalise ads or simply ask users for consent.

    The 27-country bloc’s landmark privacy rules known as the General Data Protection Regulation went into effect in 2018.

    Meta is engaging with the Irish body, a Meta spokesperson said.

    “GDPR allows for a range of legal bases under which data can be processed, beyond consent or performance of a contract. Under the GDPR there is no hierarchy between these legal bases, and none should be considered better than any other,” the spokesperson said.

    Apple’s new privacy rules, which limit digital advertisers from tracking iPhone users, have also been a blow to the Facebook parent.

    An EDPB spokeswoman declined to provide details of the decisions made. The agency said it stepped in after other national watchdogs disagreed with the Irish agency’s draft decision.

    Its draft decisions on Meta’s parent Facebook and Instagram focus on the lawfulness and transparency of processing for behavioural advertising, while its decision on WhatsApp concerns the lawfulness of processing for the purpose of the improvement of services.

    “The DPC cannot comment on the contents of the decisions at this point. We have one month to adopt the EDPB’s binding decisions and will publish details then,” the Irish Data Protection Commission said.

    Meta may have to change its business model, said Helena Brown, head of data & privacy at London-based law firm Addleshaw Goddard.

    “The direction of travel seems to be that the European regulators will not allow Meta to hide behind “provision of services” as its basis for using personal data for behavioural advertising,” she said.

    “Instead, Meta may need to change its approach to seeking clear, explicit consent instead. It will be a challenge for Meta to be able to explain its practices in a way that such consent can be lawful and well-informed,” Brown said.

    The WSJ first reported on the EDPB ruling.
     

    [ad_2]

    Source link

  • Meta oversight board urges changes to VIP moderation system

    Meta oversight board urges changes to VIP moderation system

    [ad_1]

    Facebook parent Meta’s quasi-independent oversight board said Tuesday that an internal system that exempted high-profile users, including former U.S. President Donald Trump, from some or all of its content moderation rules needs a major overhaul.

    The report by the Oversight Board, which was more than a year in the making, said the system “is flawed in key areas which the company must address.”

    The board opened its review after The Wall Street Journal reported last year that it was being abused by many of its elite users, who posted material that would result in penalties for ordinary people, including for harassment and incitement of violence.

    Facebook’s rules reportedly didn’t seem to apply to some VIP users while others faced reviews of rule-breaking posts that never happened, according to the Journal article, which said the system had at least 5.8 million exempted users as of 2020.

    The Oversight Board’s report said that the system — known as “XCheck,” or cross-check — resulted in users being treated unequally and that it led to delays in taking down content that violated the rules. Decisions on average took up to five days, it found.


    Facebook oversight board slams tech giant for withholding information about XCheck

    05:31

    Among its 32 recommendations, the board said Meta “should prioritize expression that is important for human rights, including expression which is of special public importance.”

    Users who are “likely to produce this kind of expression” should be given higher priority than others who are on the cross-check list because they are business partners, the report said.

    Ending VIP “special protection” 

    “If users included due to their commercial importance frequently post violating content, they should no longer benefit from special protection,” the board said.

    Addressing other flaws, the board also urged Meta to remove or hide content while it’s being reviewed and said the company should “radically increase transparency around cross-check and how it operates,” such as outlining “clear, public criteria” on who gets to be on the list.

    Nick Clegg, Meta’s global vice president for public affairs, tweeted that the company requested the review “so that we can continue our work to improve the program.”

    To fully address the board’s recommendations, “we’ve agreed to respond within 90 days,” he added.

    The board upheld Facebook’s decision to ban Trump last year out of concern he incited violence leading to the riot on the U.S. Capitol. But it said the company failed to mention the cross-check system in its request for a ruling.

    [ad_2]

    Source link

  • Irish privacy regulator fines Facebook 265 mn euros

    Irish privacy regulator fines Facebook 265 mn euros

    [ad_1]

    Ireland’s data privacy regulator imposed a 265 million euro ($277 million) fine on social media giant Facebook on Monday, bringing the total it has fined parent group Meta to almost 1 billion euros.

    The penalty resulted from an investigation, started last year, into the discovery of a collated set of personal data that had been scraped from Facebook between May 2018 and September 2019, and made available online.

    Facebook was also ordered to make a range of corrective measures.

    Meta said it had cooperated fully with the investigation by Ireland’s Data Privacy Commissioner (DPC) and made changes to its systems during the time in question, including removing the ability to scrape its features in this way using phone numbers.

    Monday’s fine is the fourth the DPC has levied against one of Meta’s companies. It is Meta’s lead privacy regulator within the European Union, and has 13 more inquiries into the social media group outstanding.

    In September the watchdog hit its Instagram subsidiary with a record fine of 405 million euros, which Meta plans to appeal. Metaadded in its statement on Monday that it was reviewing the decision related to the latest fine.

    The DPC regulates Apple, Google, Twitter, Tiktok and other technology giants due to the location of their EU headquarters in Ireland. It currently has 40 inquiries open into such firms, including the 13 involving Meta.

    The regulator has the power to impose fines of up to 4% of a company’s global revenue under the EU’s General Data Protection Regulation’s (GDPR) “One Stop Shop” regime introduced in 2018.

    The DPC said mitigating factors in Monday’s decision – which had been approved by all other relevant EU regulators – included the actions Facebook had taken.

    “We’ll keep going until the behaviour does change,” Ireland’s Data Privacy Commissioner (DPC) Helen Dixon told Irish national broadcaster RTE on Monday.

    ($1 = 0.9584 euros)

    [ad_2]

    Source link

  • Meta Stock Jumps 1 Percent After False Report Mark Zuckerberg Resigned

    Meta Stock Jumps 1 Percent After False Report Mark Zuckerberg Resigned

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    Meta CEO Mark Zuckerberg probably isn’t going anywhere. But on Tuesday, his company’s investors thought he was, and Meta‘s stock rose by 1%, reports the New York Post.


    NurPhoto | Getty Images

    An outlet called The Leak published a story early Tuesday in which an anonymous source said Zuckerberg would exit in 2023 due to Meta’s profit shortfall. “Information obtained by The Leak,” the article read, “suggests that Zuckerberg has decided to step down himself. The decision, per our insider source, ‘will not affect metaverse.’”

    Meta’s stock climbed 1.4% after the report was published.

    The company’s Andy Stone tweeted a terse denial of the report: “This is false.”

    As the Post noted, there are reasons to believe Zuckerberg might be reconsidering his position:

    Meta shareholders have grown restless in recent months as the company embarked on a costly shift toward metaverse technology despite a major profit slump and economic headwinds. Meta’s stock is down more than 67% so far this year.

    Earlier this month, Meta laid off 11,000 workers, or about 13% of its workforce, as part of a major cost-cutting push.

    Zuckerberg is the dominant Meta shareholder, holding more than half the shares. Given this substantial level of power and his commitment to the metaverse, it seems less than likely there’s any truth to this news.

    The Leak acknowledged Andy Stone’s denial but has not withdrawn its report.

    [ad_2]

    Steve Huff

    Source link

  • Facebook Says It Has Created A ‘Human-Level’ Board Game AI

    Facebook Says It Has Created A ‘Human-Level’ Board Game AI

    [ad_1]

    Image for article titled Facebook Says It Has Created A 'Human-Level' Board Game AI

    Screenshot: YouTube

    Facebook, or as we’re supposed to call them now Meta, announced earlier today that their CICERO artificial intelligence has achieved “human-level performance” in the board game Diplomacy, which is notable for the fact that’s a game built on human interaction, not moves and manoeuvres (like, say, chess).

    Here’s a quite frankly distressing trailer:

    CICERO: The first AI to play Diplomacy at a human level | Meta AI

    If you’ve never played Diplomacy, and so are maybe wondering what the big deal is, it’s a board game first released in the 1950s that is played mostly by people just sitting around a table (or breaking off into rooms) and negotiating stuff. There are no dice or cards affecting play; everything is determined by humans communicating with other humans.

    So for an AI’s creators to say that it is playing at a “human level” in a game like this is a pretty bold claim! One that Meta backs up by saying that CICERO is actually operating on two different levels, one crunching the progress and status of the game, the other trying to communicate with human levels in a way we would understand and interact with.

    Meta have roped in “Diplomacy World Champion” Andrew Goff to support their claims, who says “A lot of human players will soften their approach or they’ll start getting motivated by revenge and CICERO never does that. It just plays the situation as it sees it. So it’s ruthless in executing to its strategy, but it’s not ruthless in a way that annoys or frustrates other players.”

    That sounds optimal, but as Goff says, maybe too optimal. Which reflects that while CICERO is playing well enough to keep up with humans, it’s far from perfect. As Meta themselves say in a blog post, CICERO “sometimes generates inconsistent dialogue that can undermine its objectives”, and my own criticism would be that every example they provide of its communication (like the one below) makes it look like a psychopathic office worker terrified that if they don’t end every sentence with !!! you’ll think they’re a terrible person.

    Image for article titled Facebook Says It Has Created A 'Human-Level' Board Game AI

    Image: Meta

    Of course the ultimate goal with this program isn’t to win board games. It’s simply using Diplomacy as a “sandbox” for “advancing human-AI interaction”:

    While CICERO is only capable of playing Diplomacy, the technology behind this achievement is relevant to many real world applications. Controlling natural language generation via planning and RL, could, for example, ease communication barriers between humans and AI-powered agents. For instance, today’s AI assistants excel at simple question-answering tasks, like telling you the weather, but what if they could maintain a long-term conversation with the goal of teaching you a new skill? Alternatively, imagine a video game in which the non player characters (NPCs) could plan and converse like people do — understanding your motivations and adapting the conversation accordingly — to help you on your quest of storming the castle.

    I may not be a billionaire Facebook executive, but instead of spending all this time and money making AI assistants better, something nobody outside of AI research and company expenditure seems to care about, could we not just…hire humans I can speak to instead?

    [ad_2]

    Luke Plunkett

    Source link

  • Zuckerberg says WhatsApp business chat will drive sales sooner than metaverse

    Zuckerberg says WhatsApp business chat will drive sales sooner than metaverse

    [ad_1]

    Meta Platforms Inc Chief Executive Mark Zuckerberg told employees on Thursday that WhatsApp and Messenger would drive the company’s next wave of sales growth, as he sought to assuage concerns about Meta’s finances after its first mass layoffs.

    Zuckerberg, addressing pointed questions at a company-wide meeting a week after Meta said it would lay off 11,000 workers, described the pair of messaging apps as being “very early in monetizing” compared to its advertising juggernauts Facebook and Instagram, according to remarks heard by Reuters.

    “We talk a lot about the very long-term opportunities like the metaverse, but the reality is that business messaging is probably going to be the next major pillar of our business as we work to monetize WhatsApp and Messenger more,” he said.

    Meta enables some consumers to speak and transact with merchants through the chat apps, including a new feature announced Thursday in Brazil.  The company did not immediately respond to a request for comment on Thursday’s internal forum.

    Zuckerberg’s comments there reflect a shift in tone and emphasis after focusing heavily on extended reality hardware and software investments since announcing a long-term ambition to build out an immersive metaverse last year.

    Investors have questioned the wisdom of that decision as Meta’s core advertising business has struggled this year, more than halving its stock price.

    In his remarks to employees, Zuckerberg played down how much the company was spending in Reality Labs, the unit responsible for its metaverse investments.

    People were Meta’s biggest expense, followed by capital expenditure, the vast majority of which went to infrastructure to support its suite of social media apps, he said. About 20% of Meta’s budget was going to Reality Labs.

    Within Reality Labs, the unit was spending over half of its budget on augmented reality (AR), with smart glasses products continuing to emerge “over the next few years” and some “truly great” AR glasses later in the decade, Zuckerberg said.

    “This is in some ways the most challenging work … but I also think it’s the most valuable potential part of the work over time,” he said.

    About 40% of Reality Labs’ budget went toward virtual reality, while about 10% was spent on futuristic social platforms such as the virtual world it calls Horizon.

    Chief Technology Officer Andrew Bosworth, who runs Reality Labs, said AR glasses need to be more useful than mobile phones to appeal to potential customers and meet a higher bar for attractiveness.

    Bosworth said he was wary of developing “industrial applications” for the devices, describing that as “niche,” and wanted to stay focused on building for a broad audience.

    Also read: Meta appoints Sandhya Devanathan as India Vice President amid massive layoffs

    Also read: Meta’s top executive Nicola Mendelsohn is excited about India. Here’s why

    [ad_2]

    Source link

  • Meta appoints Sandhya Devanathan as India Vice President amid massive layoffs

    Meta appoints Sandhya Devanathan as India Vice President amid massive layoffs

    [ad_1]

    Mark Zuckerberg-led Meta has appointed Sandhya Devanathan as the Vice President of its India vertical – Meta India. She will take over from January 1, 2023, and will report to Meta APAC Vice President Dan Neary. Devanathan will move back to India and lead the company’s organisation and strategy in the country. She will focus on bringing the organisation’s business and revenue priorities together to help partners and clients while supporting the long-term growth of Meta’s India business. 

    The incoming Meta India Vice President will also focus on strengthening strategic relationships with leading brands, advertisers, creators, and partners to drive the behemoth’s revenue growth in India. She has over two decades of experience and an international career in areas such as banking, payments, and technology. 

    The industry veteran joined Meta in 2016 and played a significant role in building out Meta’s Singapore and Vietnam businesses and the company’s e-commerce initiatives in Southeast Asia. Devanathan led the company’s gaming vertical for APAC, one of the largest Meta verticals globally. 

    She is also an executive sponsor for Women@APAC and the global lead for Meta’s global initiative aimed at diverse representation in the gaming industry Play Forward. Besides, she is also on the global board of Pepper Financial Services. 

    “Sandhya has a proven track record of scaling businesses, building exceptional and inclusive teams, driving product innovation, and building strong partnerships,” Meta Chief Business Officer Marne Levine said on Devanathan’s appointment. 

    Devanathan’s appointment comes as global tech giants are laying off thousands of employees given the uncertain economic situation. Meta fired around 11,000 employees earlier this week and several Indians have been impacted. Zuckerberg said in a blog post that the company will provide immigration support to foreign employees. 

    Also read: ‘Some roles will no longer be required’: Amazon officially announces first round of layoffs

    Also read: Meta, Twitter layoffs: Mark Zuckerberg says he has been more thoughtful about layoffs than Elon Musk

    [ad_2]

    Source link

  • Why the Bear Market Isn’t Over

    Why the Bear Market Isn’t Over

    [ad_1]

    Investors finally got the inflation reading they were looking for, and are likely to get a split government for the next two years. That combination propelled stocks to their best weekly showing since June. On Friday, the


    S&P 500


    even briefly crossed the 4,000 threshold, a level it hadn’t breached in two months.

    The S&P ended the week 5.9% higher, closing just below 4,000. The


    Dow Jones Industrial Average


    rose 4.1%, and the


    Nasdaq Composite


    jumped 8.1%. It was the best weekly showing for the Nasdaq since March, and it came during a week when tech news seemed largely negative. Facebook parent


    Meta Platforms


    (ticker: META) announced that it will cut 11,000 jobs, the latest in a wave of Silicon Valley layoffs. The best thing Facebook can say for itself now is that it isn’t Twitter.

    [ad_2]

    Source link

  • Investors may be whistling past the graveyard of a recession with latest rally in stocks

    Investors may be whistling past the graveyard of a recession with latest rally in stocks

    [ad_1]

    Investors feeling giddy about last week’s sharp rally for stocks might want to give a listen to Tom Waits’ song, “Whistlin’ Past the Graveyard” from 1978, to sober up for the dangers that still lurk ahead.

    The surge in stocks catapulted the S&P 500 index
    SPX,
    +0.92%

    almost back to the 4,000 mark on Friday, also lifting it to the biggest weekly gain in roughly five months, according to Dow Jones Market Data.

    Investors showed courage on signs of a slight slowing of inflation, but the fortitude also comes as a drearier backdrop for investors has been unfolding in plain sight. Massive layoffs at big technology companies, the dramatic implosion of crypto-exchange FTX, and the day-to-day pain of high inflation and skyrocketing borrowing on businesses and households are all taking a toll.

    “We are not convinced this is the beginning of a new bull market,” said Sam Stovall, chief investment strategist at CRFA Research. “We believe that we are headed for recession. That has not been factored into earnings estimates and, therefore, share prices.”

    Stovall also said the stock market has yet to see the “traditional shakeout of confidence capitulation that we typically see that marks the end of the bear markets.”

    From Meta Platforms Inc.
    META,
    +1.03%

    to Lyft Inc.
    LYFT,
    +12.59%

    to Netflix Inc.
    NFLX,
    +5.51%

    there is a wave of major technology companies resorting to layoffs this fall, a threat that could sweep other sectors of the economy if a recession materializes.

    Yet, information technology stocks in the S&P 500 jumped 10% for the week, while financials, which stand to benefit from higher interest rates, rose 5.7%, according to FactSet.

    That could reflect optimism about the odds of a slower pace of Federal Reserve rate hikes in the months ahead, after sharp rate rises helped to undermine valuations and pull tech stocks dramatically lower in the past year. However, Loretta Mester, president of the Cleveland Fed, and other Fed officials since the October inflation reading on Thursday have reiterated the need to keep rates high, until 7.7% annual rate finds a clearer path to the central bank’s 2% target.

    The stock-market rally also might suggest that investors view continued mayhem in the crypto sector as contained, despite bitcoin
    BTCUSD,
    +0.42%

    trading near its lowest level in two years and the shocking collapse in recent days of FTX, once the world’s third-largest cryptocurrency exchange.

    Read: FTX’s fall: ‘This is the worst’ moment for crypto this year. Here’s what you should know.

    What happens to stocks in recessions

    Blows to the American economy rarely have been good for stocks. A look at seven past recessions, starting in 1969, shows declines for the S&P 500 as more typical than gains, with its most violent drop occurring in the 2007-2009 recession.

    The more than 37% drop of the S&P 500 from 2007 to 2009 was the worst of its kind in a recession since the late 1960s.


    Refinitiv data, London Stock Exchange Group

    While a looming U.S. recession isn’t a foregone conclusion, CEOs of America’s biggest banks have been warning about the risks for months. JP Morgan Chase’s Jamie Dimon said in October that a “tough recession” could drag the S&P 500 down another 20%, even though he also said consumers were doing fine, for now.

    Still, the steady stream of warnings about the recession odds have left many Americans confused and wondering if one can even happen without an increase in job losses.

    Big moves lately in stocks also have been hard to decode, given the economy was shocked back to life in the pandemic by trillions of dollars in fiscal stimulus and easy-money policies from the Fed that are now being reversed.

    “What I think goes unnoticed, certainly by the average person, is that these moves are not normal,” said Thomas Martin, senior portfolio manager at Globalt Investments, about stock swings this week.

    “It’s all about who is positioned how — and for what — and how much leverage they’re employing,” Martin told MarketWatch. “You get these outsized moves when people are offside.”

    Here’s a view of the sharp trajectory upward of the S&P 500 since 2010, but also its dramatic drop this year.

    Sharp rise of S&P 500 since 2010, but recent fall


    Refinitiv Datastream

    While Martin isn’t ruling out the potential for a seasonal “Santa Claus” rally heading into year-end, he worries about a potential leg lower for stocks next year, particularly with the Fed likely to keep interest rates high.

    “Certainly what’s being priced in now is either no recession or a very, very mild recession,” he said .

    However, Kristina Hooper, Invesco’s chief global market strategist, said the overarching story might be one of stocks sniffing out the first steps in a path to economic recovery, and the Fed potentially stopping its rate hikes at a lower “terminal” rate than expected.

    The Fed increased its benchmark interest rate to a 3.75% to 4% range in November, the highest in 15 years, but also has signaled it could top out near 4.5% to 4.75%.

    “If often happens that you can see stocks do well, in a less-than-good economic environment,” she said.

    The S&P 500 rose 4.2% for the week, while the Dow Jones Industrial Average
    DJIA,
    +0.10%

    gained 5.9%, posting its best weekly gain since late June, according to Dow Jones Market Data. The Nasdaq Composite Index shot up 8.1% for the week, its best weekly stretch in seven months.

    In U.S. economic data, investors will get an update on household debt on Tuesday, retail sales and homebuilder data on Wednesday, followed by jobless claims and housing starts data Thursday. Friday brings existing home sales.

    [ad_2]

    Source link

  • Massive layoffs at Meta indicate Silicon Valley woes

    Massive layoffs at Meta indicate Silicon Valley woes

    [ad_1]

    Massive layoffs at Meta indicate Silicon Valley woes – CBS News


    Watch CBS News



    Mark Zuckerberg’s Meta is laying off 13% of its workforce, as Silicon Valley companies face faltering revenues and other economic woes.

    Be the first to know

    Get browser notifications for breaking news, live events, and exclusive reporting.


    [ad_2]

    Source link

  • Meta announces layoffs for 11,000 employees

    Meta announces layoffs for 11,000 employees

    [ad_1]

    Meta announces layoffs for 11,000 employees – CBS News


    Watch CBS News



    Meta, the parent company of Facebook and Instagram, is cutting about 13% of its workforce. Carter Evans has the details.

    Be the first to know

    Get browser notifications for breaking news, live events, and exclusive reporting.


    [ad_2]

    Source link

  • Facebook owner Meta cuts 11,000 jobs—13% of workforce

    Facebook owner Meta cuts 11,000 jobs—13% of workforce

    [ad_1]

    Facebook parent Meta is laying off 11,000 people, about 13% of its workforce, as it contends with faltering revenue and broader tech industry woes, CEO Mark Zuckerberg said in a letter to employees Wednesday.

    The job cuts come just a week after widespread layoffs at Twitter under its new owner, billionaire Elon Musk. There have been numerous job cuts at other tech companies that hired rapidly during the pandemic.

    Zuckerberg said he had made a mistake in previously moving to hire aggressively, expecting rapid growth even after the pandemic ended.

    “Unfortunately, this did not play out the way I expected,” Zuckerberg said in a prepared statement. “Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that.”

    Meta, like other social media companies, enjoyed a financial boost during the pandemic lockdown era because more people stayed home and scrolled on their phones and computers. But as the lockdowns ended and people started going outside again, revenue growth began to falter.

    Meta’s “train wreck”

    An economic slowdown and a grim outlook for online advertising — by far Meta’s biggest revenue source — have contributed to Meta’s woes. This summer, Meta posted its first quarterly revenue decline in history, followed by another, bigger decline in the fall.

    Meta shares have tumbled more than 70% this year, compared with 32% for the tech-heavy Nasdaq Composite index. As of late October, Meta had lost roughly $700 billion in market value, leading one Wall Street analyst to call it a “train wreck.” The company’s stock price rose 4% ahead of the start of trade on Wednesday to $100.57.

    Some of the pain is company-specific, while some is tied to broader economic and technological forces.

    Last week, Twitter laid off about half of its 7,500 employees, part of a chaotic overhaul as Musk took the helm. He tweeted that there was no choice but to cut the jobs “when the company is losing over $4M/day,” though did not provide details about the losses.

    Other large tech companies, including Amazon, Google owner Alphabet, ride-sharing player Lyft and payments provider Stripe, have either announced layoffs or paused hiring amid concerns about a potential recession next year.

    “The Meta reductions are among the largest to date of any company (not just in tech), and we think it portends additional headcount cuts to come across Corporate America,” analyst Adam Crisafulli of Vital Knowledge said in a report to investors.


    Twitter asks dozens of former employees to return days after massive layoffs

    06:11

    Meta has worried investors by pouring over $10 billion a year into the “metaverse” as it shifts its focus away from social media. Zuckerberg predicts the metaverse, an immersive digital universe, will eventually replace smartphones as the primary way people use technology.

    Meta and its advertisers are bracing for a potential recession. There’s also the challenge of Apple’s privacy tools, which make it more difficult for social media platforms like Facebook, Instagram and Snap to track people without their consent and target ads to them. Competition from TikTok is also an a growing threat as younger people flock to the video sharing app over Instagram, which Meta also owns.

    Zuckerberg said Meta will offer laid-off workers the equivalent of 16 weeks of their base pay, plus two additional weeks for every year they’ve been with the company. Meta will also cover the cost of health insurance for them and their families.

    [ad_2]

    Source link

  • Mark Zuckerberg-led Meta to begin layoffs from today; those impacted to get four months salary

    Mark Zuckerberg-led Meta to begin layoffs from today; those impacted to get four months salary

    [ad_1]

    Meta Platforms Inc will begin laying off employees on Wednesday morning, Chief Executive Mark Zuckerberg told hundreds of executives on Tuesday, the Wall Street Journal reported.

    Zuckerberg appeared downcast in Tuesday’s meeting and said he was accountable for the company’s missteps and his overoptimism about growth had led to overstaffing, the report added, citing people familiar with the matter.

    He described broad cuts and specifically mentioned the recruiting and business teams as among those facing layoffs, the report said, adding an internal announcement of the company’s layoff plans is expected around 6 a.m. Eastern time on Wednesday.

    The specific employees losing their jobs will be informed over the course of the morning, the report said.

    Meta’s head of human resources, Lori Goler, said employees who lose their jobs will be provided with at least four months of salary as severance, the WSJ reported, citing people familiar with the matter.

    Meta reported more than 87,000 employees at the end of September.

    The company declined to comment on the report.

    The development comes after Twitter laid off half its workforce across teams ranging from communications and content curation to product and engineering following Elon Musk’s $44 billion takeover.

    However, Bloomberg on Sunday reported Twitter was reaching out to dozens of employees who lost their jobs, asking them to return.

    Microsoft Corp also laid off around 1,000 employees across several divisions in October, according to an Axios report.

    [ad_2]

    Source link

  • WSJ News Exclusive | Meta’s Mark Zuckerberg Says He Is Accountable as Company Preps for Mass Layoffs

    WSJ News Exclusive | Meta’s Mark Zuckerberg Says He Is Accountable as Company Preps for Mass Layoffs

    [ad_1]

    Layoffs are to begin on Wednesday morning, the CEO told hundreds of executives on Tuesday

    [ad_2]
    Source link

  • Here’s How Social Media Giants—Including Twitter And Meta—Are Bracing For Midterm Misinformation

    Here’s How Social Media Giants—Including Twitter And Meta—Are Bracing For Midterm Misinformation

    [ad_1]

    Topline

    All major social media platforms have outlined plans to tackle misinformation around the midterm election and its immediate aftermath, but questions will remain about their effectiveness and the ability of these platforms to adequately implement these measures after struggling to do so during the 2020 elections.

    Key Facts

    Meta, which owns Facebook and Instagram, has temporarily suspended all “political, electoral and social issue” ads from its platforms like it did during the 2020 election and says it will reject all ads that discourage people from voting or question the legitimacy of the elections— will also take down posts that promote voter suppression, including misinformation about polling dates, locations, timings and voter eligibility.

    TikTok says it has been labeling all content around the midterms with links to its “Election Center” page which the company says will offer users “authoritative information” about the polls.

    The platform will take down any content pushing election misinformation, harassment of poll workers, hateful behavior, and violent extremism and any content which is in the process of being fact checked by its partners will not be recommended on user’s ‘For You’ feed.

    Twitter says it plans to get ahead of misinformation on the platform using “prebunks” which are prompts that appear on a user’s timeline that “proactively address topics that may be the subject of misinformation.”

    Like it did in 2020, Twitter says it will continue to use labels on tweets sharing election-related misinformation, claiming that these help both direct people toward debunking content while reducing engagement levels for these tweets.

    Both YouTube and its parent Google will rely on the Associated Press to display “authoritative election results” on their platforms, while YouTube will also elevate content from “authoritative news sources” like “CNN and Fox News,” limit the spread of “harmful election misinformation” and add information panels on top of all election related search results.

    What To Watch For

    All eyes will be on Twitter after it was recently acquired by billionaire and self-styled “free speech absolutist” Elon Musk. While Twitter continues to have policies in place to deal with election misinformation, there have been concerns about its ability to enforce these policies as it is set to lose nearly half of its workforce in a mass layoff on Friday. Earlier this week, Twitter’s Head of Safety and Integrity Yoel Roth acknowledged that the platform had seen a brief surge in hateful content after being acquired by Musk, but attributed most of these issues to a small number of troll accounts. Earlier this week, Bloomberg reported that most members of Twitter’s Trust and Safety team have been restricted from accessing the platform’s internal moderation tools. In addition to this, Twitter’s new owner, Elon Musk, faced criticism over the weekend after he tweeted out an unfounded conspiracy theory about the attack on House Speaker Nancy Pelosi’s husband. Musk, who has engaged in a war of words with progressive Rep. Alexandria Ocasio-Cortez (D-N.Y.), responded to a clip of the congresswoman accusing Musk of restricting her Twitter account by writing “What can I say? It was a naked abuse of power.”

    Key Background

    All the policies outlined by the major social media platforms largely seem to build upon measures that were in place for the 2020 elections. While most of these policies were enacted as outlined, there were several questions about the effectiveness of the use of labels and fact checks by “authoritative sources.” Immediately after the 2020 election, all platforms had to scramble to deal with former President Donald Trump’s refusal to concede and various conspiracy theories shared by him and his supporters about the legitimacy of the election process. The proliferation of these false claims, led by the former president, came to a head when Trump supporters stormed the Capitol building on January 6, resulting in the former president being banned from all major social media platforms.

    Tangent

    It is unclear what kind of “authoritative news” content YouTube plans to elevate but the choice of Fox News as one of the sources may raise some eyebrows as the network faces a $1.6 billion lawsuit from voting machine maker Dominion which has accused it of amplifying false claims about the voting machines being used to rig the 2020 elections.

    Further Reading

    Twitter Safety Head Admits ‘Surge In Hateful Conduct’ As Firm Reportedly Limits Access To Moderation Tools (Forbes)

    [ad_2]

    Siladitya Ray, Forbes Staff

    Source link

  • Apple Is Now Valued More Than Alphabet, Amazon and Meta Combined

    Apple Is Now Valued More Than Alphabet, Amazon and Meta Combined

    [ad_1]

    • Apple’s market value is now higher than that of Alphabet, Amazon and Meta combined.
    • The iPhone maker’s worth stands at $2.307 trillion, while its tech peers add up to $2.306 trillion.
    • Tech stocks have suffered after posting poor quarterly earnings, but Apple dodged a wipeout.

    This story was originally published on Business Insider.


    Loren Elliott/Reuters via Business Insider

    Apple’s market cap was $2.307 trillion at Wednesday’s close.

    Apple is now worth more than fellow tech giants Alphabet, Amazon and Meta combined, after it ended trading Wednesday with a market value of $2.307 trillion.

    At the same time, the market caps of its three tech giant peers added up to $2.306 trillion at the close of trading Wednesday. Google parent Alphabet’s market cap stood at $1.126 trillion, Amazon’s at $939.78 billion and Facebook parent Meta’s at $240.07 billion, Yahoo Finance data showed.

    Overall, Big Tech stocks suffered a brutal selloff last week on the back of disappointing quarterly earnings. But Apple’s stock has outperformed its peers after it beat Wall Street’s revenue and profit forecasts for its fourth quarter.

    The iPhone maker’s shares soared 8% in the wake of its results. After their earnings reports, Meta plunged more than 20%, Amazon fell about 10%, while Alphabet saw a single-digit decline.

    Alphabet, Amazon and Meta’s lackluster earnings signaled that demand for digital advertising is flagging. The poorly-received results have helped wipe billions off their market values as their shares fell, and pushed Amazon out of the trillion-dollar market cap club.

    Over the past five sessions, Apple’s stock has risen 0.16%, while Alphabet has fallen 5.7%, Amazon is down 17.0% and Meta has lost 7.6% over that period.

    Despite Apple’s achievement, its market cap has fallen back from its $2.193 trillion value at the end of 2021. A series of headwinds — high inflation, rising interest rates, fears of recession and the Ukraine war among them — have meant tech stocks have struggled in 2022 as investors lost appetite for higher risk assets.

    This story was amended to correct the market cap figure in the headline. Apple’s market value is $2.307 trillion, not $2.037 trillion.

    [ad_2]

    Zahra Tayeb

    Source link

  • Meta Is The S&P 500’s Worst Performer Of 2022 As Losses Near 75%

    Meta Is The S&P 500’s Worst Performer Of 2022 As Losses Near 75%

    [ad_1]

    Topline

    Shares of Facebook parent Meta overtook the dubious honor as the biggest loser on the S&P 500 this week as the Silicon Valley giant bleeds money to fund its CEO Mark Zuckerberg’s metaverse vision and underscores big tech’s 2022 downfall.

    Key Facts

    Meta stock has faltered all year, but crashed 25% last Thursday after reporting concerning quarterly earnings and is down a further 11% this week to a seven-year low of below $90.

    The social media titan is down 73.7% year-to-date and nearly 80% from its 2021 high of $384.

    The most recent dip was enough to overtake the S&P’s prior worst performer, Invisalign maker Align Technology, which is down 73.2% in 2022.

    Meta’s crash has been much more impactful than Align’s, accounting for 0.7% of the S&P’s weight compared to 0.04% for Align.

    Key Background

    Meta’s market capitalization of $236 billion is a far cry from its $1 trillion market cap last summer, and the company is now just the 34th largest public company in the world after ranking as high as fifth. The company changed its name from Facebook to Meta last fall to reflect its pivot to augmented reality, or the metaverse. The metaverse has proven to be an unmitigated disaster for Meta, reporting $9.4 billion in losses in the division year-to-date as macroeconomic headwinds further eat into its bottom line. The company reported a 49% decline in profits, buoyed by a decline in its advertising business, last Wednesday, sending the stock spiraling.

    Big Number

    48%. That’s how much the FAANG group of tech giants (Facebook parent Meta, Amazon, Apple, Netflix and Google parent Alphabet) is down collectively year-to-date. That far outpaces the 22% decline for the S&P, weighed down by the five companies that account for 12% of the index’s weight.

    Forbes Valuation

    Zuckerberg’s net worth has fallen by $104 billion over the past year to $32.8 billion, according to our calculations. The third-wealthiest person in the world as of last October, Zuckerberg is now the 29th-richest.

    Further Reading

    Mark Zuckerberg’s Fortune Dropped $11 Billion Thursday–And Is Down $100 Billion Since Meta’s Stock Peaked (Forbes)

    Meta Stock Crash Steepens As Facebook Parent Grapples With Recession Fears (Forbes)

    Here’s How Big Tech Stocks Have Performed In 2022 As FAANG Softens Its Bite (Forbes)

    [ad_2]

    Derek Saul, Forbes Staff

    Source link

  • The last American venture capitalist in Beijing: Here are the strategic miscalculations undermining America’s technology competition with China

    The last American venture capitalist in Beijing: Here are the strategic miscalculations undermining America’s technology competition with China

    [ad_1]

    On Oct. 10, the Biden administration announced a series of sanctions aimed at cutting off the flow of American talent and equipment to the Chinese semiconductor industry. The policy marked a significant departure from the administration’s initial forays which targeted extending American leadership in the industry via funding grants, such as the $100 billion CHIPS and Science Act.

    The latest actions make clear that the U.S. feels it must couple defensive and offensive action to “maintain as large of a lead as possible” over China, as National Security Advisor Jake Sullivan described. What is becoming clear, however, is that the Americans have already lost the initiative in many core technology-enabled areas.

    Since 2017, the U.S. government has pursued a strategic “decoupling” whereby American economic and technological systems were to be disentangled from China. Many of the resulting sanctions, especially on the Chinese tech industry, foreshadowed those now being taken against Russia.

    Putin’s descent into global pariah status has been a long time coming–yet the effectiveness of these sanctions has revealed the unintended consequences of sanctions against China. As one of the last American VCs in China and the son of the U.S. Air Force pilot who flew Henry Kissinger to Beijing, I have seen firsthand the nuance of our relationship.

    To be clear, the U.S.-China relationship has significant tensions. Nevertheless, China is not Russia.

    To start, decoupling pushed China further towards technological self-sufficiency, illuminating China’s technological vulnerabilities and providing a window to bridge these gaps. The effectiveness of future sanctions will be muted compared to those now being taken against Russia. This divergence will not only be a result of the size and sophistication of the Chinese economy–but also because America gave China years of lead time to prepare.

    Sanctions on Russia were significantly strengthened precisely because America still controls Russia’s digital rails (operating systems and app stores). America’s decoupling policy needlessly made China fully aware of these vulnerabilities, spurring the Chinese to protect themselves and ultimately extend their commercial and political influence. 

    In the field of semiconductors, human talent, private and public capital, and regulatory support mobilized en masse are enabling China to leap rungs on the evolutionary ladder of chip development. A recent report claims SMIC took just two years to leap from 14 nm to 7 nm–faster than TSMC and Samsung, without the most advanced production equipment.

    The history of U.S. unilateral hardware sanctions against the Chinese is not pretty. In the 1990s, we decided to cut China’s access to US-built satellites. Other nations rushed to fill the market gap. Today, China consumes roughly 40% of the world’s chips. The Dutch, Koreans, and others will loathe abandoning this market to align with US sanctions. A former senior National Security Council official recently told me that even typical China hawks such as Japan and India were questioning the logic of the recent American action, which could actually trigger a rush from other nations to design-out U.S. products as quickly as possible, so as to not fall within the sanctions guidelines. The net effect here is clear “self-harm,” as a senior former NSC official told me this week.

    Sanctions on China have also impacted America’s ability to win hearts, minds, and wallets globally. Decoupling actually encouraged Chinese dominance in other battleground markets by forcing Chinese tech to take ownership over app stores, hardware, and operating systems that were historicaly ceded to the Americans.

    In 2019, Google forcibly removed its operating system and app store from Huawei phones after the United States Department of Commerce added the Chinese company to its trade restriction list. By 2020, Huawei announced it would use its internally built HarmonyOS on all of its hardware and would look to replace Google Play Store with its own AppGallery.

    Once American-controlled app stores are removed from emerging market phones, Chinese companies can pre-load or provide exclusive access to Chinese applications, rather than their American competitors. Imagine a Huawei, Xiaomi, Oppo, Vivo, or Techno user in Africa only able to access Didi ride-hailing affiliates instead of Uber, Alipay mobile payment partners instead of PayPal, Shein affiliated e-commerce platforms instead of Amazon, TikTok instead of Facebook, Youku instead of YouTube, iQiyi instead of Netflix, etc. Chinese companies control 78% of the African feature phone market and provide almost 70% of Africa’s 4G networks. A significant segment of the African market now uses mobile interfaces that could potentially box out American-built applications. Aside from Samsung, there is no global handset (be it a smartphone or feature phone) alternative to the Chinese-built hardware.

    Growing Chinese tech independence has also transformed U.S.-China competition across the globe. In an era where goodwill and economic ties scale exponentially through digital connectivity, decoupling hinders America’s strategic relationship with countries and global consumers, as it forces them into a binary decision on technology partnerships. Goaded by America to choose sides, many key emerging markets may elect to work with China.

    To understand the growing power of Chinese competition, look no further than TikTok. Since it entered the American market, TikTok has exploded as the dominant both social and entertainment platform. In 2021, Americans spent an average of 25.6 hours a month on TikTok. This dwarfs the average time spent by Americans on TikTok’s competitors: Facebook (16.1 hours) and Instagram (7.7 hours). Only YouTube came close at 22.6 hours a month. Who has Netflix cited as amongst their most formidable competition in a letter to shareholders? TikTok. While TikTok and Netflix deliver different products, they are competing for the same thing: your attention. Time (or to be more specific, screen time) is finite. Netflix has a $10 billion production budget. TikTok’s users generate its content for free. The more time users spend on TikTok, the less there is available for other forms of socializing or entertainment.

    TikTok isn’t just a threat to traditional American social media, entertainment, and news platforms. Google’s two-decade unchallenged dominance as a search engine is eroding, as TikTok’s native search capabilities become the go-to hub for GenZ. The company is now expanding into e-commerce and logistics, threatening American giants like Amazon. 

    The real cost of miscalculating

    TikTok’s growing dominance is emblematic of the advantage that Chinese tech has over its American counterparts in the global competition for users. The dominance of Chinese models isn’t driven just by rock-bottom production costs. Core technology innovation is what drives it, particularly as it relates to TikTok’s highly addictive algorithmic recommendation engine.

    In 2018, I hosted a dinner party between Peter Thiel and Zhang Yiming, the Founder of Tiktok’s parent company Bytedance. When our Chinese interlocutors questioned Thiel about Facebook’s lack of recent innovation, he pointed to a content partnership with Major League Baseball. Zhang laughed. After years of being told Chinese tech was only capable of copying American giants, this moment must have felt vindicating. It was probably as gratifying for Zhang as when Facebook’s TikTok knock-off called Lasso (where Thiel was previously a board member) sputtered and crashed in just under two years.

    American tech giants have effectively been walled off from competition since the mid-2000s. Their near-monopoly position–and the rent-seeking it once enabled–has made them complacent.

    Chinese tech can now challenge Silicon Valley in an increasing number of areas. Models popularized in the Chinese market are a challenge for U.S. tech, particularly in emerging markets. There are hundreds of other Chinese-built, funded, or inspired applications that share TikTok’s voracious ability to latch onto the minds and wallets of consumers. In addition to TikTok, e-commerce platforms such as Shein and AliExpress, short-form video app Kuaishou, and various gaming companies owned by Tencent (like Fortnite) have a combined global customer base on a scale of billions.

    American policy towards China shouldn’t turn into a self-defeating prophecy. We are not locked in a zero-sum dynamic. As the two largest economies and strategic powers in the world, America and China still have much to gain through cooperation.

    There is no path to solving the great global challenges of our time (reversing climate change, pandemic management, nuclear disarmament, avoiding global financial crisis) without China’s direct collaboration. If Russia was to resort to using tactical nuclear weapons in Ukraine, no other nation could play a more pivotal role in staving off World War III than China. Decoupling is a poor policy choice for addressing these myriad and complex tensions.

    Worst of all, the loss of China as a market and increased zero-sum competition with China will reduce economic opportunities for American companies and dim American growth prospects. We will miss globalization when it’s gone.

    Ben Harburg is the managing partner of the global investment firm MSA Capital.

    The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

    More must-read commentary published by Fortune:

    [ad_2]

    Ben Harburg

    Source link

  • Why the Dow is having a killer month as it heads for best October ever

    Why the Dow is having a killer month as it heads for best October ever

    [ad_1]

    The Dow Jones Industrial Average has been criticized by some market watchers for being a poor barometer of equity-market performance given its relatively small sample size of just 30 stocks.

    But this quality, along with the paucity of megacap technology names, has helped shepherd the index toward what’s expected to be its biggest October gain in its 126-year history.

    With a month-to-date gain of 14%, the Dow
    DJIA,
    +2.57%

    is on track for its best monthly performance since January 1976, when it rose 14.4%, according to Dow Jones Market Data. To clinch its best October ever, it only needs to hang on to a month-to-date gain of 10.65% by the time the U.S. market closes on Monday.

    The Dow is still in a bear market and remains down more than 10% for the year to date. That compares, however, with year-to-date losses of 18.6% for the S&P 500
    SPX,
    +2.40%

    and 29.6% for the Nasdaq Composite
    COMP,
    +2.74%
    .

    What exactly has made the Dow’s October performance so stellar?

     The blue-chip gauge is packed with energy and industrials stocks, which have been among the best performing sectors for the stock market since the start of the year, noted Art Hogan, chief market strategist at B. Riley Wealth Management. 

    These stocks have performed particularly well since the start of the latest quarterly earnings season, while megacap technology names like Meta Platforms Inc.
    META,
    +1.14%
    ,
    Amazon.com Inc.
    AMZN,
    -7.41%

    and Alphabet Inc.
    GOOG,
    +4.28%

    have sputtered after delivering results and guidance that disappointed Wall Street this week.

    “It’s very tech-light, and it’s very heavy in energy and industrials, and those have been the winners,” Hogan said. “The Dow just has more of the winners embedded in it and that has been the secret to its success.”

    See: Live markets coverage

    The Dow is on track to log its highest close in at least two months on Friday as it outperforms both the S&P 500
    SPX,
    +2.40%

    and Nasdaq Composite
    COMP,
    +2.74%
    .
    Furthermore, it’s on track to climb for a sixth straight session, what would be its longest winning streak since May 27, according to DJMD. 

    Adding to the list of notable factoids, the average is also on track to log a fourth straight weekly gain, which would cement its longest winning streak since Nov. 5, 2021, when the index rose for five straight weeks. 

    Caterpillar Inc.
    CAT,
    +3.22%
    ,
    Chevron Corp.
    CVX,
    +0.75%

    And Amgen Inc.
    AMGN,
    +2.21%

    are the top-performing Dow stocks so far this month, having gained 29.3%, 21.2% and 18.3%, respectively, as of Friday.  

    In recent trade, the blue-chip average was up around 700 points, or 2.2%, on track for its biggest daily point and percentage gain in exactly one week.  

    [ad_2]

    Source link